- Bargaineering - http://www.bargaineering.com/articles -

TurboTax 2011 Review

Posted By Jim On 03/09/2011 @ 2:55 pm In Reviews | 44 Comments

I had the opportunity get a demonstration of the new TurboTax 2011 [3] online tax preparation package and I came away very impressed with the level of automation they included. Last year, the most impressive new additions was the ability to flag certain parts (which would’ve prevented me from having to file an amended return [4] after I put in a placeholder value) and their audit scanning feature (looks for red flag mistakes like mismatching numbers).

This review of TurboTax applies to the software used to handle Tax Year 2010 returns.

EasyImport W-2, 1099

This year, it seems that automation was their top priority because they increased the number of individuals who can now import your W-2 data directly from your employer’s payroll system. They work with many of the payroll providers, like ADP, and now over 250,000 employers are supported. It’s a more than doubling of the number of supported employers [5].

In addition to importing data from employers, they also have the ability to pull tax information from banks and brokers as well. They can import 1099 information from ninety financial institutions [5], including A.G. Edwards, E*Trade Securities, Scottrade, USAA, and Vanguard.

Importing this data is one of the most time consuming and error prone parts of tax preparation. We have about a dozen 1099-INTs and after a while you start entering them in on autopilot, which is when you start making mistakes. All it takes is one minor error and you trigger an investigation because your 1099-INT doesn’t match the 1099-INT at the IRS and there’s no way for software to protect you (they don’t have access to your paper 1099-INT!)

So I think the expansion of this feature is the real hallmark of this year’s edition.

Optimizing Your Deductions

Unless you’re a tax accountant, you can’t be confident that the deductions you pick are going to be the best ones for you. There are so many competing deductions out there that every software package should have this next feature – a way to optimize your deductions.

The best example is education credits [6]. They have changed so much in the last few years that it’s hard to remember which is which. Remember the Hope Credit? Yeah, it’s gone. We have the American Opportunity Credit and the Lifetime Learning Credit. If you have no idea what the difference, you’re not alone.

Fortunately, TurboTax does and they’ll ask you a series of questions and give you the best option. They will also calculate the credit of every alternative, so you know which is better and by how much. All too often a software package will rely on you to decide and just do the math, this takes it one step further. When you think about it, that’s what the software should be doing.

Summary

I don’t know how this compares with the advances made by other tax prep packages but they’ve continued to innovate and improve on a good product, one that I started using seven years ago. I think that most people, in picking which package to use, typically follow whatever their parents used or whatever they used in the past. Familiarity breeds a bit of contempt and, honestly, why fix something that’s not broken? If, however, your tax prep package doesn’t import as much data as possible and forces you to enter it in manually, you might want to check the list of supporting financial institutions to see if you can shave some time off the prep process.

Giveaway!

The kind folks at TurboTax also gave me some TurboTax Premier Online codes to giveaway to three lucky Bargaineering.com readers. All I ask is that you leave a comment below stating your favorite tax deduction, I’ll select three winners on March 16th at noon. If you want to leave a comment but don’t want to win (because you’ve already filed or some other reason), please say so in the comments.

Good luck!


Article printed from Bargaineering: http://www.bargaineering.com/articles

URL to article: http://www.bargaineering.com/articles/turbotax-2011-review.html

URLs in this post:

[1] Tweet: http://twitter.com/share

[2] Email: mailto:?subject=http://www.bargaineering.com/articles/turbotax-2011-review.html

[3] TurboTax 2011: http://turbotax.intuit.com/

[4] file an amended return: http://www.bargaineering.com/articles/file-amended-tax-return.html

[5] number of supported employers: http://turbotax.intuit.com/ide-partner.jsp

[6] education credits: http://www.irs.gov/pub/irs-pdf/p970.pdf

Thank you for reading!